6 things you need to know about Nicaragua’s big dumb canal project

Mar 28, 2015

MANAGUA, Nicaragua — Fist-pumping Sandinistas and unknown Chinese businessmen are gathering in Nicaragua’s capital today to break ground on the largest — and most baffling — engineering project in the history of Latin America: a $50 billion interoceanic canal that will bisect the country like a loaf of bread.

The project, slapped together in a hasty no-bid contract that awarded an enigmatic Chinese investor and his upstart company, HKND, with a generous 50-year concession to own and operate the 172-mile canal and its related bundle of projects (ports, railways, free-trade zones, airport, golf resorts), may or may not be backed by the Chinese government. On separate occasions, company spokesman Ronald MacLean-Abaroa has told me that Chinese state businesses will “finance a great part of this project,” and alternately that there will be “no government involvement whatsoever, not from China or any other country.” Oddly enough, Nicaragua does not even have diplomatic relations with China.

Even at today’s groundbreaking, there are far more questions than answers. Nicaraguans still don’t know the exact route of the canal will take, which properties are marked for expropriation, or where displaced farmers will be relocated. No one knows how much the canal costs, or who’s paying for it (the $50 billion figured was pulled from thin air — previous figures have ranged from $17 – 40 billion).

No one knows who is going to build the canal (despite promises of 200,000 jobs, no Nicaraguan ditch diggers have been hired so far). And —to the grave concern of people who fret about stuff like drinking water—no one knows what the environmental impacts will be on Nicaragua’s tropical ecosystem and its expansive Lake Cocibolca. Even as the Chinese prepare to fire up the bulldozers, the company hasn’t released any environmental impact studies — dig first, worry about that shit later.

Here’s what we do know:

1. Nicaragua Canal (Take 73)

This isn’t Nicaragua’s first attempt at building an interoceanic canal. In fact, it’s their 73rd try. Since colonial times, wild-eyed explorers, engineers, politicians, investors and lunatics have fantasized about sailing ships across Nicaragua. With a 56-mile-wide lake and a 64-mile navigable river — two things that boats like — building a canal across Nicaragua has always been a tempting thought (the Chinese, however, will not be using the Rio San Juan for their Atlantic cut, rather a series of smaller rivers and lakes further north).

The United States alone tried four times to build a canal across Nicaragua. In 1878, the U.S. was so desperate for an interoceanic canal it surveyed eight different routes — one in Mexico, one in Nicaragua, two in Panama, and four in Colombia. Panama won, but Nicaragua was the favorite.

The U.S. came the closest to building a Nicaraguan canal on it’s first attempt, when U.S. industrialist Cornelius Vanderbilt started to dredge a canal on the Caribbean coast. He got all of 2 kilometers inland before quitting. In the remote jungle outpost of Greytown, on Nicaragua’s Caribbean coast, Vanderbilt’s old river dredge is still rusting in “Morgan’s Lagoon,” named for the famous pirate captain by the same name.

More than 150 years later, the topographical studies done by U.S. engineers in the 1850s and 1870s remain the most thorough surveys of Nicaragua. In fact, the Chinese are using the exact same Pacific cut that was first identified and mapped in 1850 by U.S. engineer O.W. Childs, who gets no credit for doing all the heavy lifting.

2. Sandinistas giftwrapped canal for a Chinese mystery man

Voting dutifully along party lines and with only a perfunctory nod at due democratic process, Sandinista lawmakers on June 13, 2013 unilaterally passed into law a presidentially mandated canal concession (Law 840) that gives unknown Chinese firm HKND-Group a 50-year contract to “design, develop, engineer, finance, construct, possess, operate, maintain and administer” the Great Nicaragua Canal megaproject. The upstart canal company, which is based in Hong Kong but registered in Grand Cayman Island, would own the project for the first 50 years and become a minority partner for the second 50 years, if we dare to think that far ahead.

The concession law, which was written in English and opposed by every opposition party in Nicaragua, was rushed into the books in less than a week, without any public debate or consultation from indigenous groups whose lands will be expropriated, in violation of the Atlantic Coast Autonomy Law. The one Sandinista lawmaker who abstained (she may have nodded off before the vote) was fired from her elected office the following week, which came as a surprise to those who thought they were living in a democracy.

Opposition groups argue the concession violates 40 articles of the constitution related to national sovereignty, independence, the environment, and indigenous rights. Critics claim it also violates 10 international treaties and agreements and 15 instruments of the Central American Integration System. More than 30 constitutional challenges were filed against the canal law, but Sandinista judges summarily dismissed them all in one day without consideration.

The concession law sets up Wang Jing, a Chinese telecom magnate who claims to be a “normal Chinese citizen” who lives at home with his mom, to become the biggest and most powerful landowner in Nicaragua. Or, as he says it, Ni-cara-wa. (When you own the place, you can call it whatever you want).

3. Tu casa es mi casa

The Sandinista government is reportedly planning to expropriate up to 7,000 homes to make way for the 172-mile canal, but it’s still anyone’s guess who’s on the hit list. The canal law says that the government can expropriate any land deemed necessary for the Chinese canal, which will cut a 13-mile wide swath through the middle of the country, affecting 12 municipalities, 6 of which will be cut in half to make way for shipping commerce, golf resorts, free-trade zones, “Coast Relaxing Resort,” and other crap that Nicaragua didn’t know it needed.

So far there are no clear plans about where — or if — passageways will be built connecting folks living on opposite banks of the canal. So if you live in Nueva Guinea, and you’re not a bird, you might want to say goodbye to your cousin on the north side of town before the bulldozers arrive.

Some 282 rural settlements totaling more than 24,100 homes will be directly affected by the canal, according to an independent report by the Centro Humboldt.

What the report doesn’t say is that the canal will cut right through the middle of “contra country;” and these anti-Sandinista hardliners says they aren’t willing to surrender their property without a fight. Though the concessioners are offering to pay a small amount for the expropriated land, the campesinos says their land is not for sale. As they say in Nicaragua, sometimes it’s better to have a good fight than a bad deal.

Nicaraguan cowboys this week started forming roadblocks on the highway from Managua to Nueva Guinea to block traffic and check cars for “chinos,” as the Chinese surveyors are known. “We’re not going to let them measure or steal our properties,” local resident Celestino Suárez told the daily La Prensa over the weekend.

For many, the impending landgrab for the canal project is hauntingly reminiscent of the Sandinista land confiscations during the revolutionary government of the 1980s, including the forced relocation of indigenous villages that led to the Navidad Roja massacre of 1982 — one of the darkest chapters of the Sandinista Revolution.

4. Nicaraguan army at the service of Chinese investors

With the Chinese canal identified as a national priority, the Nicaraguan Army has been put at the service of HKND. Soldiers are already protecting Chinese surveyors who scurry about the countryside with pencils and measuring tapes. The guns are necessary, the company says.

“The people go with protection because we don’t know what can happen,” Ronald MacLean-Abaroa, spokesman of HKND, told me during an interview earlier this year in Washington, D.C. “Nicaragua is not a very tranquil country, even though it’s a peaceful country now. But there’s always danger.”

Some think the army has confused its role, and is protecting the foreign invader rather than defending Nicaragua. Retired general and revolutionary hero Hugo Torres, known as “Comandante Uno” from the Sandinistas’ guerrilla assault on the National Palace in 1978, says the army that he helped to turn into a professional fighting force is now playing a “sad role” by protecting a Chinese businessman.

The are also concerns that the Russia will provide additional muscle. Following a surprise visit to Managua earlier this year by Vladimir Putin, Russian media started to report that Moscow has offered military support to Nicaragua during construction of the canal. “Russia’s role will be to guard the construction site against possible acts of provocation,” reports RBTH media. “To that end, the Nicaraguan authorities have signed a special agreement with Moscow, allowing Russian warships and aircraft to be present in its territorial waters for the first six months of this year and also to carry out patrols of the country’s coastline in the Pacific Ocean and the Caribbean Sea until June 30, 2015.”

5. Screw the environment

HKND says protecting the environment and Lake Cocibolca will be a top priority for the company. In fact, they’re so serious about conservation efforts that they haven’t wasted a single sheet of paper printing an environmental-impact study. The company has hired a British environmental consulting firm, but their report won’t be made public until next April — after construction has started.

Nicaragua’s oldest non-governmental environmental group is taking the matter a little more seriously. And their findings are damning.

“The eventual construction of the Interoceanic Grand Canal in Nicaragua and the related projects is the biggest threat to the environmental conditions of the country in its history and could lead to greater risk to the Nicaraguan population to not meet their basic needs for safe water and food,” reads the first sentences of Centro Humboldt’s environmental and social assessment of the canal project.

The report gets worse from there. In a nutshell, the Humboldt study found the concession law exempts the Chinese company from complying with any of Nicaragua’s environmental laws, exposing the country to possible “irreversible destruction of fragile ecosystems.”

The canal would affect 1,411 square kilometers of protected natural reserve, deforest 6,000 acres of primary forest, impact two of Nicaragua’s three biospheres, and “critically affect” the remaining habitats of the tapir, jaguar, manatee, giant anteater and five species of sea turtles.

There’s also significant risk of a cataclysmic disaster. Nearly 49 percent of the canal will pass through an area considered “high level of seismic threat” and 6 percent of the canal route is in an area of “frequent and prolonged flooding.”

But the biggest risk is that the canal will suck the country dry. According to projections for global warming, by 2039 Nicaragua won’t have enough water to float ships across the country anymore. Which kinda sucks.

6. Nicaragua, a new economic powerhouse?

The Sandinista government is seeing dollar signs. The government promises the canal will be a game-changer for Nicaragua, transforming the poorest country in the region into the third-fastest growing economy in the world over the next five years.

With remarkable statistical precision, the Sandinista government projects the canal will lift exactly 403,583 Nicaraguans out of poverty by 2018, and an additional 353,935 people will be pulled from the grasps of extreme poverty. The country’s overall poverty rate would drop from 42 percent to exactly 31.35 percent over the next five years, according to the government’s projections.

The canal will immediately push Nicaragua’s economic growth into the double digits, peaking at 15 percent growth rate in 2015, according to the government.

Overall, Nicaragua’s economy will double over the next five years, reaching $24.8 billion by 2018. Employment will triple.

The canal will also change global trade, the government boasts.

Sandinista PowerPoint enthusiasts claim world maritime shipping traffic will increase by more than 42 percent by 2025. The Nicaragua canal, which will be much wider and deeper than it’s Panamanian counterpart, will be built to pass the new generation of “Triple E” containerships that are too fat to fit through the Panama Canal.

But before any of that can happen, the canal has to get built first — something that many Nicaraguans still doubt will ever happen. Indeed, while Sandinistas are banking on the canal to change Nicaragua’s future, the opposition is hoping the future will prevent the canal from happening.